Written for Louisiana Mortgage Handbook by Chasity Graff, Louisiana mortgage broker.
Last reviewed: 2026-06-23
Quick Answer
You usually need cash for more than the down payment. Most buyers also need to plan for closing costs, prepaid taxes and insurance, escrow setup, inspections, appraisal, and money left in the bank after closing.
Down payment is only one piece
The down payment gets the most attention because it is easy to understand. But it is not the whole number. A buyer may have a 3%, 3.5%, 5%, 10%, or 20% down payment depending on the loan program, property type, occupancy, credit profile, and overall approval.
Closing costs are separate
Closing costs are the charges connected to getting the loan and transferring the property. These may include lender fees, appraisal, credit report, title work, attorney or closing fees, recording fees, and other third-party charges.
Prepaids and escrow can surprise people
Prepaids are not exactly the same thing as closing costs. They are items you are paying ahead, like homeowners insurance, prepaid interest, and initial escrow deposits for taxes and insurance. In Louisiana, insurance can be a big part of the conversation, so I like to check it early.
Seller concessions may help
A seller contribution can sometimes help cover closing costs and prepaid items, depending on the loan program and the structure of the contract. It does not usually replace your required down payment, but it can reduce how much you need to bring to closing. Seller concession limits vary by loan program and down payment percentage.
Do not forget money after closing
The cleanest approval in the world still does not make it fun to own a home with no cushion. Keep money available for moving, utility deposits, minor repairs, furniture, and normal life.
My Thought Process
When I review cash with a borrower, I am not just asking, ‘Can you close?’ I am asking, ‘Can you close and still be okay?’ Those are different questions. A loan that technically works may still feel wrong if it empties the account.
Common Mistakes
- Thinking down payment and cash to close are the same thing.
- Forgetting insurance may be due before or at closing.
- Not budgeting for inspections.
- Counting money that is not documented or seasoned.
- Spending cash before underwriting is finished.
Bottom Line
Your true cash need is down payment plus closing costs plus prepaids and escrow, minus any allowed credits or seller contributions. Then add common sense: you still need money left after closing.
Related Questions
- What Are Closing Costs?
- Can Seller Concessions Cover Closing Costs?
- Why Do Lenders Need Bank Statements?
- Can My Parents Gift My Down Payment?
Educational Note
Educational note: This page is meant to explain the mortgage process in plain English. It is not a loan approval, commitment to lend, rate quote, or legal/tax advice. Mortgage programs, pricing, documentation requirements, and guidelines can change. Final approval depends on credit, income, assets, property approval, underwriting, and lender guidelines.